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Amazon and Google Cloud Storage Pricing – Crazy Eddie Edition

By Brian Reagan, VP Product Strategy & Business Development – Last week was an (other) amazing week in tech.  Just in time for the Holidays, Amazon and Google have been waging a price war for their respective cloud offerings that is dizzying in both its speed and aggressiveness.

As I catch my breath from the bleachers, I had a few questions for the companies who dropped unit prices 30% inside of a week:

I.      Which one of you will be first to announce that cloud storage is now free? 

Neither company is far from that point to begin with, but if they’re truly embracing the “give away the razor and sell the blades” mindset, this seems like the next step.  And given the speed with which they’ve arrived at their most recent prices, it’s not far away.

II.    How much new fine print was just added to your click-wrap agreements?

The last time I checked, both Amazon and Google were (immensely) profitable businesses.  Just how many ancillary fees will start to appear in a monthly bill to offset the price decline?

III.  Are you banking on reactionary price drops from your competitors that crater their businesses and have them running for the exits before they represent any meaningful threat?

Of course they are, who are we kidding?

IV.  Are you concerned about allegations of collusion/anti-trust that will inevitably arise after you kill off the competition?

Just as these two Internet giants are playing the long-game, the US Government has demonstrated patience in building a case when it’s justified.  Continuing the earlier sports metaphor, we’re definitely in the first inning when it comes to case law regarding the cloud.  I suspect the recent DOJ lawsuit for price-fixing in the e-book space is a harbinger of things to come in cloud storage.

It’s clear that Amazon and Google are riding the disruptive innovation curve hard, laying waste to many companies who’ve rested on the “expensive because it’s for the enterprise” value proposition.   This week’s moves set the stage for the next wave of competitive responses; the view from the bleachers will only get more interesting.

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